Boulder's alternative charter amendment may sidestep debt limit

City: Putting dollar amount on the ballot tells Xcel too much

A charter amendment designed to compete with an Xcel-backed initiative to place debt limits on a future Boulder electric utility may not include an actual dollar amount for voters to consider.

In a memo to City Council, attorneys for the city said including a specific dollar amount in the debt limit for the utility's start-up costs in a ballot measure could give Xcel Energy too much information about how much the city is willing to pay to acquire its assets. Instead, they recommend the City Council put forward a charter amendment that would require that debt not be issued unless there will be enough revenue to cover the operating costs and the debt service, plus a reserve of 25 percent of the debt service amount.

That debt test is the same as the charter requirement for starting a municipal utility that voters narrowly approved in 2011.

The Boulder City Council is scheduled to hold a public hearing and second vote on whether to proceed with acquiring Xcel Energy's assets on Tuesday. At that same meeting, they will vote on a title for the initiative charter amendment and on a title and language for a city-backed alternative charter amendment.

Proponents of municipalization believe the initiative amendment places too many restrictions on the operation of the utility and is designed to prevent its formation.

Backers of the initiative say they just want voters to have some control over the total debt the utility could take on.

The initiative charter amendment, which faces a challenge from New Era Colorado about how its signatures were gathered, calls for a total debt limit election to be held at the next general municipal election in 2015 and for affected county residents to be allowed to vote in that election.

If you go

What: Boulder City Council

When: 6 p.m. Tuesday

Where: Boulder Municipal Building, 1777 Broadway

More info: There will be a public hearing on municipalization issues. To read the background material, go to http://bit.ly/18XrzRJ.

Many City Council members have supported the idea of a competing ballot measure that addresses some of the same community concerns. The initial alternative proposal called for a debt limit for start-up costs to be placed before the voters this November.

If two conflicting ballot measures both pass, the one that gets more votes goes into effect.

Menu of options for alternative ballot measure

The memo lays out three options for an alternative ballot measure. They are:

A bond or debt test This approach would say that the utility could not issue debt unless the projected revenues would be enough to cover all operating expenses and debt service, as well as an amount equal to 25 percent of the debt service to used as a reserve.

This is the strategy recommended by the City Attorney's Office because it doesn't give Xcel Energy a specific upper limit of what the city could pay for the company's assets.

"A bond or debt test is preferable from a litigation strategy, in that when you place a number out in the public as to what your maximum price is, then, often times it provides your opponent with a target that it will use to attempt to defeat the municipalization acquisition efforts," the memo said. "A bond or debt test will provide the City with a limitation that is intended to ensure that future councils will act in a financially responsible manner as the city considers municipalization."

A large debt limit that includes all start-up costs The advantage of this approach, the memo said, is that because the debt limit amount includes costs beyond just acquisition, Xcel would not be able to easily attribute a specific amount to specific aspects of acquisition and start-up. The disadvantage is that voters might reject a large debt limit for the utility.

A smaller debt limit to cover acquisition costs The advantage of this option, the memo said, is that it places a specific debt limit before the voters. The disadvantage is that it gives Xcel a very clear idea of the upper limit of what the city will pay.

So far, city staff have not proposed specific numbers for the latter two options, and if the City Council went with one of those options, they would have to vote on a specific number on Aug. 20, when the council is scheduled to take a final vote on all the November ballot measures.

The city charter amendment would also allow county residents who are utility customers to serve on the utility advisory board and makes explicit that one of the jobs of the advisory board is to make recommendations on rates to the City Council.

It does not contain a provision to allow for county residents to vote in elections related to the utility.

Boulder Mayor Matt Appelbaum said the city should pursue legislative and regulatory changes that would allow county residents to have a choice in their utility provider in the future, but in the memo, officials said that option shouldn't be placed into the charter, as the city has limited control over what happens with utility provider choice.

Councilman Ken Wilson, who opposes municipalization, said what voters really want is a say on the costs.

"If the city puts on a competing ballot measure, it should have a number in it," he said. "That's what people want. Or they should get some assurance they'll get to vote."

Wilson said it would be too easy for officials to say they could meet the bond test.

"We voted in some tests in the past, and I think the city's gaming those a bit," Wilson said, referring to the charter requirements to start a utility.

Councilwoman Lisa Morzel, who supports a city utility, said the city has always been financially responsible and even conservative, as reflected in its AAA bond rating.

"I want to do what we need to do to make sure our ability to acquire the system is not hampered," she said. "We have experts we have hired to help us with this decision, and I will defer to their recommendation."

Former Mayor Bob Greenlee, who writes a column for the Camera, said not putting a number in the alternative amendment could backfire.

"This is a continuation of the blank check the City Council has been given," he said. "It gives people one more reason to vote for the citizen initiative."

Councilman Macon Cowles, who has been a strong advocate for an alternative measure, said he sees the merits of both versions of the charter amendment and hasn't made up his mind yet.

Charter amendment backer calls city's title language 'shocking'

The City Council will also vote on the title of the initiative amendment that will appear on the ballot. At their July 24 meeting, several council members said the title initially proposed by staff -- Limit on Debt of a New Electric Utility and Providing County Voters Elector Status in Related City Elections -- did not do enough to show the impact of requiring an election for any and all debt, a requirement that goes beyond the Taxpayer Bill of Rights and is not required of other public utilities.

Cowles suggested a title of Constraints on a New Electric Utility.

Currently, the recommended title is Initiated Charter Amendment Restricting Debt and Requiring and Restricting Elections of the Electric Utility.

Katy Atkinson, a spokeswoman for Voter Approval of Debt Limits, the group backing the charter amendment, said it was "shocking" that the city was playing politics with the title of the ballot measure.

"The word 'restrict' is nowhere in the ballot measure, and it's not about restricting elections or restricting debt," she said. "It's about citizen approval of debt, and it only says when debt elections can be held. It's a slap in the face to the 7,500 people who signed these petitions in good faith saying they wanted to vote on this issue."

The proposed title for the city charter amendment, for the moment anyway, is the supremely neutral Charter Amendments to Article XIII, Light and Power Utility.

Cowles said that whatever the titles of the competing ballot measures end up being, it should be clear to both supporters and opponents of a municipal utility which charter amendment advances the utility and which hinders it.

"We're trying to respond to the concerns in the community that a lot of people want to vote on this again," he said.

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